On a non-GAAP basis: gross margins of 59.3%; record operating
income of $161.5 million; record net income of $141.3 million; and
record EPS of 64 cents per diluted share. The first call published
estimate for non-GAAP EPS was 61 cents.

On a GAAP basis: gross margins of 58.9%; operating income of
$126.0 million; net income of $111.5 million; and EPS of 50 cents
per diluted share. There was no published first call estimate for
GAAP EPS.

Record quarterly net sales for total microcontrollers, 16-bit
microcontrollers and 32-bit microcontrollers

May 06, 2014 04:15 PM Eastern Daylight Time

CHANDLER, Ariz.--(BUSINESS WIRE)--Microchip Technology Incorporated (NASDAQ: MCHP), a leading provider of
microcontroller, mixed-signal, analog and Flash-IP solutions, today
reported results for the three months and fiscal year ended March 31,
2014 as summarized in the following table:

Three Months Ended March 31, 2014

Year Ended March 31, 2014

(in millions, except earnings per diluted share and percentages)

GAAP

% ofNet Sales

Non-GAAP1

% ofNet Sales

GAAP

% ofNet Sales

Non-GAAP1

% ofNet Sales

Net Sales

$

493.4

$

493.4

$

1,931.2

$

1,931.2

Gross Margin

$

290.6

58.9%

$

292.6

59.3%

$

1,128.7

58.4%

$

1,136.4

58.8%

Operating Income

$

126.0

25.5%

$

161.5

32.7%

$

458.9

23.8%

$

613.2

31.8%

Other Expense including Gains/Losses on Equity Method Investments

$

7.8

$

4.8

$

26.5

$

19.2

Income Tax Expense

$

6.7

$

15.4

$

37.1

$

63.0

Net Income

$

111.5

22.6%

$

141.3

28.6%

$

395.3

20.5%

$

531.0

27.5%

Earnings per Diluted Share

50 cents

64 cents

$

1.82

$

2.45

See the “Use of Non-GAAP Financial Measures” section of this
release.

Consolidated net sales for the fourth quarter of fiscal 2014 were $493.4
million, up 2.3% sequentially from net sales of $482.4 million in the
immediately preceding quarter, and up 14.7% from net sales of $430.1
million in the prior year’s fourth quarter. Consolidated GAAP net income
for the fourth quarter of fiscal 2014 was $111.5 million, or 50 cents
per diluted share, up 5.8% from GAAP net income of $105.4 million, or 48
cents per diluted share, in the immediately preceding quarter, and up
86.8% from GAAP net income of $59.7 million, or 28 cents per diluted
share, in the prior year’s fourth quarter.

Consolidated non-GAAP net income for the fourth quarter of fiscal 2014
was $141.3 million, or 64 cents per diluted share, up 6.3% from non-GAAP
net income of $132.9 million, or 61 cents per diluted share, in the
immediately preceding quarter, and up 29.3% from non-GAAP net income of
$109.3 million, or 52 cents per diluted share, in the prior year’s
fourth quarter. For the fourth quarters of fiscal 2014 and fiscal 2013,
our non-GAAP results exclude the effect of share-based compensation,
expenses related to our acquisition activities (including intangible
asset amortization, inventory valuation costs, severance costs, and
legal and other general and administrative expenses associated with
acquisitions), non-cash interest expense on our convertible debentures,
and non-recurring tax events. A reconciliation of our non-GAAP and GAAP
results is included in this press release.

Consolidated net sales for the fiscal year ended March 31, 2014 were
$1.931 billion, an increase of 22.1% from net sales of $1.582 billion in
the prior fiscal year. On a GAAP basis, consolidated net income for the
fiscal year ended March 31, 2014 was $395.3 million, or $1.82 per
diluted share, an increase of 210.3% from net income of $127.4 million,
or 62 cents per diluted share in the prior fiscal year.

On a non-GAAP basis, consolidated net income for the fiscal year ended
March 31, 2014 was $531.0 million, or $2.45 per diluted share, an
increase of 36.7% from net income of $388.5 million, or $1.89 per
diluted share, in the prior fiscal year.

Microchip also announced today that its Board of Directors declared a
quarterly cash dividend on its common stock of 35.55 cents per share.
The quarterly dividend is payable on June 3, 2014 to stockholders of
record on May 21, 2014.

“We are very pleased with our execution in the March quarter and for
fiscal year 2014,” said Steve Sanghi, President and CEO. “Our non-GAAP
operating results were excellent and we exceeded the midpoint of our
guidance in net sales, gross margin, and operating margins while setting
a new record for earnings per share.”

“The March quarter set all-time records in net sales for total
microcontrollers, 16-bit microcontrollers and 32-bit microcontrollers,”
said Ganesh Moorthy, Chief Operating Officer. “We also set all-time
records for 8-bit, 16-bit and 32-bit microcontroller revenue in fiscal
2014. Our revenues from 16-bit microcontrollers were up 44.2% and our
revenues from 32-bit microcontrollers were up 73.0% in fiscal 2014
compared to fiscal 2013. Our microcontroller results continue to
outperform the industry and we are gaining significant market share.”

Rich Simoncic, Vice President, Analog and Interface Products Division,
said, “Our analog net sales were up 32.0% in fiscal 2014 compared to
fiscal 2013. Our April 1, 2014 acquisition of Supertex adds high voltage
analog products and process technologies to our portfolio, and we are
excited about the long-term opportunities that the combined company can
achieve.”

Eric Bjornholt, Microchip’s Chief Financial Officer, said, “Our cash and
investment balance grew by a record $183.1 million in the March 2014
quarter prior to our dividend payment. The dividend that we announced
today marks the 41st occasion that we have increased our
dividend payment, and cumulative dividends paid are over $2.2 billion.”

Mr. Sanghi concluded, “We enter the June quarter with a good backlog
position and the June quarter is normally a growth quarter for
Microchip, coming off of the negative impact of the Lunar New Year on
our Asia business in the March quarter. Given this backdrop we expect
our non-GAAP net sales to be up between 5.3% and 8.3% sequentially. This
guidance includes a projected $16.5 million in non-GAAP sales from
Supertex. Without Supertex, revenue from Microchip’s historical business
is expected to be up between 2% and 5% sequentially, which is in line
with our net sales results for the last three June quarters.”

Microchip’s Recent Highlights:

UBM Tech's (EETimes/EDN) 2014 Embedded Market Survey of design
engineers once again ranked Microchip #1 for 8-, 16- and 32-bit MCUs,
as well as DSPs, in answer to, "Which chip family would you consider
for your next project?" (For respondents using processor speeds under
100 MHz.)

Microchip continued to lead the industry in 8-bit microcontroller
innovation, announcing three new families of 8-bit PIC®
MCUs during the quarter. In fact, the Company won EE Live!/ESC’s
annual Best of Show “Embeddy” award in the Hardware category, for its
new PIC16F170X/171X MCUs. This family combines a large amount of
integrated intelligent analog and Core Independent Peripherals, which
can operate while the core is sleeping. More work can be done with
this integrated peripheral hardware, which requires no code to
operate, dramatically reducing current consumption, cost, board space
and memory size. The end result is substantially lower development and
system costs for a broad range of applications, in markets such as
consumer, portable medical, LED lighting, battery charging, power
supplies and motor control.

The peripheral-rich, low pin count PIC16(L)F161X family further
expands Microchip’s Core Independent Peripheral offerings, which
offload timing-critical and core-intensive tasks from the CPU,
allowing it to focus on other application tasks. Additionally, this
family integrates fault-detecting hardware features to assist
engineers in developing safety-critical applications.

The PIC12(L)F157X 8-bit MCU family features multiple 16-bit PWMs with
an assortment of analog peripherals and serial communications in an
8-pin package. These MCUs deliver three full-featured 16-bit PWMs with
independent timers, for applications where high resolution is needed,
such as LED lighting, stepper motors, battery charging and other
general-purpose applications.

To make it even easier for developers to create complex designs using
its 16-bit dsPIC30 and dsPIC33 digital signal controllers (DSCs), such
as sophisticated motor-control systems, Microchip updated its MPLAB®
Device Blocks for Simulink® with multi-rate and interrupt
capabilities. This software provides a set of user interfaces to
MathWorks’ Simulink graphical environment for simulation and
model-based design, where code for the application is generated,
compiled and loaded onto a target dsPIC® DSC in a single,
one-click step.

Microchip also expanded its very broad Analog & Interface portfolio
with two new device families for the growing energy-measurement
market, as well as a new motor driver. The MCP39F501 power-monitoring
IC offers high-accuracy signal acquisition and power calculations,
providing a complete power-monitor solution for consumer, commercial
and industrial products.

The MCP3913 and MCP3914 energy-measurement Analog Front Ends (AFEs)
offer industry-leading accuracy for three-phase smart meters and
multiple-load power monitoring applications. As the energy-metering
infrastructure is being upgraded worldwide, designers are demanding
increased AFE accuracy, performance and flexibility to develop the
latest generation of smart meters. These features are also required by
the designers of advanced power-monitoring systems for applications
such as server power supplies and power distribution units,
uninterruptible power supplies, smart power strips and
data-acquisition products in the industrial and commercial markets.

The MCP8063 is a highly integrated, cost-effective, automotive
AEC-Q100-qualified motor driver that delivers superior performance in
a small, 8-pin, 4x4 mm DFN package. It is also the world’s first to
combine all of those features with 1.5A peak phase current for the
180-degree sinusoidal drive of a variety of three-phase brushless DC
motor and fan applications. These features are ideal for a broad range
of motor applications in markets such as the automotive, IT,
industrial and home-appliance sectors, which are faced with increasing
regulatory and consumer demands for continued reductions in cost,
space, noise and power consumption; with better performance and safety.

To enable the continued proliferation of modern user interfaces in
embedded systems, Microchip introduced the new MTCH6102 family of
projected-capacitive touch controllers with the industry’s lowest
power consumption. These turnkey controllers make it easy for
designers to add contemporary touch and gesture interfaces in
cost-sensitive applications.

Microchip also grew its portfolio of the world’s most reliable memory,
with the 34AA04 Serial Presence Detect (SPD) EEPROM. This device is
designed to work with the next generation of Double Data Rate 4 (DDR4)
SDRAM modules used in high-speed PCs and laptops, while also
supporting the older DDR2/3 platforms.

First Quarter Fiscal Year 2015 Outlook:

The following statements are based on current expectations. These
statements are forward-looking, and actual results may differ
materially. Due to the closing of our Supertex acquisition on April 1,
2014, we are not able to provide GAAP guidance at this time, as the
purchase accounting valuation adjustments related to the acquisition
including acquired intangibles and inventory write-up as well as other
acquisition-related charges are not yet known. We are able to provide
the following Non-GAAP guidance which includes Supertex:

Microchip Guidance - Non-GAAP1

Net Sales

$519.8 million to $534.6 million

Gross Margin3

59.3% to 59.5%

Operating Expenses3

26.6% to 27%

Other Income (Expense)

($6.9) million

Tax rate

10.2% to 10.6%

Net Income

$143.7 million to $151.7 million

Diluted Common Shares Outstanding2

224 million shares

Earnings per Diluted Share2

64 cents to 68 cents

1 See the “Use of Non-GAAP Financial Measures” section
of this release.

2 Earnings per share have been calculated based on the
diluted shares outstanding of Microchip on a consolidated basis.

3 See Footnote 3 under the “Use of Non-GAAP Financial
Measures” section of this release.

Excluding the Supertex acquisition, Microchip’s inventory days at June
30, 2014 are expected to be reduced to between 107 days and 111 days.
Our inventory position enables us to continue to service our customers
with very short lead times while allowing us to control future capital
expenditures. Our actual inventory level will depend on the inventory
that our distributors decide to hold to support their customers,
overall demand for our products and our production levels.

Excluding Supertex, capital expenditures for the quarter ending June
30, 2014 are expected to be approximately $40 million and capital
expenditures for all of fiscal year 2015 are anticipated to be
approximately $125 million. We are continuing to take actions to
selectively invest in the equipment needed to support the expected
growth of our new products and technologies.

Excluding Supertex, we expect net cash generation during the June
quarter of $140 million to $160 million prior to the dividend payment
and our acquisition related activities.

1

Use of non-GAAP Financial Measures: Our non-GAAP adjustments,
where applicable, include the effect of share-based compensation,
expenses related to our acquisition activities (including
intangible asset amortization, inventory valuation costs,
restructuring costs, severance costs, earn-out adjustments and
legal and other general and administrative expenses associated
with acquisitions), non-cash interest expense on our convertible
debentures, gains on strategic investments, the related income tax
implications of these items and non-recurring tax events. Our
non-GAAP net sales reflect revenue from product in the acquired
companies' distribution channel at the acquisition date that is
not included in GAAP net sales.

We are required to estimate the cost of certain forms of share-based
compensation, including employee stock options, restricted stock
units and our employee stock purchase plan, and to record a
commensurate expense in our income statement. Share-based
compensation expense is a non-cash expense that varies in amount
from period to period and is affected by the price of our stock at
the date of grant. The price of our stock is affected by market
forces that are difficult to predict and are not within the control
of management. Our other non-GAAP adjustments are either non-cash
expenses or non-recurring expenses related to such transactions.
Accordingly, management excludes all of these items from its
internal operating forecasts and models.

We are using non-GAAP net sales, non-GAAP gross profit, non-GAAP
gross profit percentage, non-GAAP operating expenses in dollars and
as a percentage of sales including non-GAAP research and development
expenses and non-GAAP selling, general and administrative expenses,
non-GAAP operating income, non-GAAP other expense, net, non-GAAP
income tax/tax rate, non-GAAP net income, and non-GAAP diluted
earnings per share which exclude the items noted above, as
applicable, to permit additional analysis of our performance.

Management believes these non-GAAP measures are useful to investors
because they enhance the understanding of our historical financial
performance and comparability between periods. Many of our investors
have requested that we disclose this non-GAAP information because
they believe it is useful in understanding our performance as it
excludes non-cash and other charges that many investors feel may
obscure our underlying operating results.

Management uses these non-GAAP measures to manage and assess the
profitability of our business. Specifically, we do not consider such
items when developing and monitoring our budgets and spending. Our
determination of the above non-GAAP measures might not be the same
as similarly titled measures used by other companies, and it should
not be construed as a substitute for amounts determined in
accordance with GAAP. There are limitations associated with using
non-GAAP measures, including that they exclude financial information
that some may consider important in evaluating our performance.
Management compensates for this by presenting information on both a
GAAP and non-GAAP basis for investors and providing reconciliations
of the GAAP and non-GAAP results.

2

Diluted Common Shares Outstanding can vary for, among other
things, the trading price of our common stock, the actual exercise
of options or vesting of restricted stock units, the potential for
incremental dilutive shares from our convertible debentures
(additional information regarding our share count is available in
the investor relations section of our website under the heading
“Supplemental Financial Information”), and the repurchase or the
issuance of stock. The diluted common shares outstanding presented
in the guidance table above assumes an average Microchip stock
price in the June 2014 quarter of $48 per share (however, we make
no prediction as to what our actual share price will be for such
period or any other period and we cannot estimate what our stock
option exercise activity will be during the quarter).

Microchip will host a conference call today, May 6, 2014 at 5:00 p.m.
(Eastern Time) to discuss this release. This call will be simulcast over
the Internet at www.microchip.com.
The webcast will be available for replay until May 13, 2014.

A telephonic replay of the conference call will be available at
approximately 8:00 p.m. (Eastern Time) May 6, 2014 and will remain
available until 8:00 p.m. (Eastern Time) on May 13, 2014. Interested
parties may listen to the replay by dialing 719-457-0820 and entering
access code 1988387.

Cautionary Statement:

The statements in this release relating to making excellent progress
towards our long-term model of 35% non-GAAP operating margin, our
microcontroller results continuing to outperform the industry, gaining
significant microcontroller market share, the long-term opportunities
that the combined company of Microchip and Supertex can achieve, the
June quarter being normally a growth quarter for Microchip, expecting
non-GAAP net sales to be up between 5.3% and 8.3% sequentially,
projecting $16.5 million in non-GAAP sales from Supertex, expecting
Microchip’s historical net sales in the June quarter to be up between 2%
and 5%, our first quarter fiscal 2015 guidance (GAAP and Non-GAAP as
applicable) including net sales, gross margin, operating expenses, other
income (expense), tax rate, net income, diluted common shares
outstanding, earnings per diluted share, inventory days, continuing to
service our customers with very short lead times while allowing us to
control capital expenditures, capital expenditures for the June 2014
quarter and for fiscal 2015, selectively investing to support the
expected growth of our new products and technologies, net cash
generation and assumed average stock price in the June 2014 quarter are
forward-looking statements made pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995. These
statements involve risks and uncertainties that could cause our actual
results to differ materially, including, but not limited to: any
continued economic uncertainty; any unexpected fluctuations or weakness
in the U.S. or global economies; changes in demand or market acceptance
of our products and the products of our customers; the mix of inventory
we hold and our ability to satisfy short-term orders from our inventory;
changes in utilization of our manufacturing capacity and our ability to
effectively manage our production levels; competitive developments;
supply of wafers from third party wafer foundries and the cost of such
wafers; the costs and outcome of any current or future tax audit or any
litigation involving intellectual property, customers or other issues;
our actual average stock price in the June 2014 quarter and the impact
such price will have on our share count; disruptions in our business or
the businesses of our customers or suppliers due to natural disasters
(including any floods in Thailand), terrorist activity, armed conflict,
war, worldwide oil prices and supply, public health concerns or
disruptions in the transportation system; and general economic, industry
or political conditions in the United States or internationally.

For a detailed discussion of these and other risk factors, please refer
to Microchip's filings on Forms 10-K and 10-Q. You can obtain copies of
Forms 10-K and 10-Q and other relevant documents for free at Microchip’s
website (www.microchip.com)
or the SEC's website (www.sec.gov)
or from commercial document retrieval services.

Stockholders of Microchip are cautioned not to place undue reliance on
our forward-looking statements, which speak only as of the date such
statements are made. Microchip does not undertake any obligation to
publicly update any forward-looking statements to reflect events,
circumstances or new information after this May 6, 2014 press release,
or to reflect the occurrence of unanticipated events.

About Microchip:

Microchip Technology Incorporated is a leading provider of
microcontroller, mixed-signal, analog and Flash-IP solutions, providing
low-risk product development, lower total system cost and faster time to
market for thousands of diverse customer applications worldwide.
Headquartered in Chandler, Arizona, Microchip offers outstanding
technical support along with dependable delivery and quality. For more
information, visit the Microchip website at www.microchip.com.

Note: The Microchip name and logo, PIC, dsPIC, and MPLAB are registered
trademarks of Microchip Technology Inc. in the USA and other countries.
All other trademarks mentioned herein are the property of their
respective companies.